Ann: Significant Upgrade for Old Pirate sets ABM , page-2

re: Ann: Significant Upgrade for Old Pirate s... Excellent news even if slightly below what I expected in overall ounces- certainly not enough to change my valuation. If anything there is now less need to discount for risk of missing expectations and todays announcement highlights there is plenty of room for further ounces to be added.
“Western Limb below 150m depth utilising drill data only and focused on two drill sections of higher grade. Further work anticipates extending this along strike.”
“Western Limb along strike to the north: Quartz veins have been exposed in two outcrops approximately 500m and 800m directly along strike from the northern extents of the Western Limb and have returned assay grades up to 34.7g/t gold in surface samples and 32.1g/t in scout drilling. These provide the potential to more than double the strike length of the existing 2013 resource.”

GH excellent results with grade and ounces better than I was expecting on the high grade core.
59koz at 16.5g/t including 49koz at an incredible 45.6g/t.
That grade must be unique in Australia from surface at these sorts of widths.
That has to add at least $70mill value after royalties rather than the $50mill I was allowing for.
Hopefully more to come from there this year- and hopefully another similar prospect yet to be discovered.
Two GH’s would make up our current market cap.
“Further Golden Hind look-a-likes: The Golden Hind Deposit has a very small footprint but contains highgrade gold and a significant number of ounces. Golden Hind was only discovered in mid-2012. The Company is planning to conduct further detailed geochemistry along the overall 6 kilometre Old Pirate trend with the aim of targeting further Golden Hind look-a-like systems.”

723koz at 12g/t is an excellent early resource leading in to mining from an open pit mine and open at depth and strike.
“The Western Limb, for example, has potential to more than double in strike length, with high-grade gold at surface, a further 800m along strike from the edge of the resource model.”
Still looks like we will be heading towards 1mill oz for OP after this years work. Around three quarters of the way there now.
High grade zones from Buccaneer could get us there imminently.

“All mineralised grade shells were constrained by a geological model constructed by ABM. The grade shells were populated with a block model with minimum block dimensions of 0.5m, 1m, 1m (X,Y,Z).”
This means that the 12g/t (uncut) resource grade already factors in significant mining dilution so these grades are incredibly high.
Top cut grade has seen a big improvement to over 10g/t and 600koz (from under 8g/t and 427koz).
That increase especially in grade is excellent news for those that prefer to use the top cut numbers.
Judging by the following, it seems the company believes that grades will reconcile higher with trial mining.

“The surface longitudinal sampling work conducted by ABM showed zones up to 60m long with average grades in excess of 100g/t and zones over 15 to 25m length to average in excess of 300g/t gold. Individual and selective grab samples (not used in resource work) have shown grades in excess of 2000g/t gold. It is evident that known high-grade veins can be intersected with multiple holes but only return low grade results with the effect of undercalling the grade of the vein. As a further example of the impact of sample size on grade, the Company’s gravity recovery test work involved two 100kg samples thought to be identical and grading approximately 20g/t.
However, one sample returned a recovered grade in excess of 40g/t and the other in excess of 140g/t (refer release 05/09/2012). This is further evidence that increasing sample size may have a positive effect on overall grade and the Company expects positive overall reconciliation of grades.”

There is clear potential that trial mining results may result in another strong resource upgrade even before new exploration results from trenching and drilling can be analysed.
Ie if grades reconcile better, then we may see another resource upgrade much earlier than the end of the year.

“ABM has applied for permits to conduct a 10,000 tonne bulk sample / trial mining operation at Old Pirate. Permits have been granted by the Central Land Council and by the Titles Division at the Department of Resources (Northern Territory). The Mine Management Plan has been submitted, revised and re-submitted, and is awaiting final confirmation.”
It looks like permitting has now been strongly de-risked.

“Further information on the trial mining details including budget and schedule will be released shortly.”